Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

People ask what it takes to become an angel investor expecting a checklist they can complete. The reality is more nuanced. Some requirements are binary qualifications you either meet or don't. Others are ongoing commitments that shape whether you'll succeed once you start. Understanding both categories helps you evaluate fit honestly.

This is what it really takes to become an angel investor, covering the qualifications, the commitments, and the mindset the endeavor demands.

The Formal Qualification: Accreditation

The legal barrier to most quality angel investing is accredited investor status. This isn't arbitrary gatekeeping. It's regulatory structure built on assumptions about who can afford the risk of total investment loss.

Income qualification requires sustained high earnings. You need $200,000 or more in annual income for the past two years, with reasonable expectation of continuing at that level. For joint income with a spouse, the threshold is $300,000. This isn't one good year but demonstrated earning capacity over time.

Wealth qualification provides an alternative path. If your net worth exceeds $1,000,000 excluding the value of your primary residence, you qualify regardless of income. This calculation includes investment accounts, other real estate, and business ownership, minus liabilities.

Professional certifications can also qualify you. Holders of Series 7, Series 65, or Series 82 licenses qualify as accredited investors regardless of income or wealth. This path is less common but available for those with relevant professional credentials.

The accreditation requirement exists because angel investing involves high probability of total loss. Regulators assume that meeting these thresholds indicates capacity to absorb such losses without devastating financial consequences. Whether you agree with this framework, it's the reality you must navigate.

As Elizabeth Yin, co-founder and GP of Hustle Fund, explains: "Most of your investments will return $0. You will lose money. So it's important to have great portfolio construction."

The accreditation requirement attempts to ensure investors can handle the losses that even good portfolio construction still produces.

The Capital Requirement: Genuine Surplus

Meeting accreditation thresholds doesn't mean you have appropriate capital for angel investing. The capital you deploy must be genuinely surplus, meaning money whose complete loss wouldn't affect your life in any meaningful way.

Retirement savings don't qualify as surplus. Money earmarked for retirement should stay in diversified, liquid investments. Angel investing's illiquidity and risk profile make it inappropriate for retirement capital regardless of your accreditation status.

Emergency funds must remain separate. Your financial cushion for unexpected expenses shouldn't be invested in illiquid startups. Maintain adequate emergency reserves before considering angel allocation.

Near-term purchase savings should stay liquid. If you're saving for a house down payment, education expenses, or other major purchases within the next decade, that money shouldn't go into angel investments you can't access for 7-10 years.

Genuine surplus is what remains after all these needs. For most people, this means angel investing represents 5-10% of liquid investable assets at most. The practical amount is typically $15,000-25,000 deployed over 2-3 years, enabling a portfolio of 20+ investments at $1,000 each.

As Eric Bahn, co-founder and GP of Hustle Fund, emphasizes: "For beginners, a bigger startup portfolio is better. It helps with diversification and helps you learn and get reps in. Investing requires practice like everything else."

Building a bigger portfolio requires capital deployed consistently over years, not a single large commitment.

The Time Requirement: Sustained Engagement

Angel investing demands ongoing time commitment that many underestimate when starting. This isn't passive investing where you deploy capital and wait for returns. Active engagement determines outcomes.

Weekly engagement of 3-5 hours is typical during active portfolio building. This includes reviewing opportunities, conducting diligence on promising deals, participating in educational programming, and engaging with community discussions. During the 2-3 years of portfolio construction, consistent weekly time matters.

Ongoing engagement of 2-3 hours weekly continues during the management phase. After initial portfolio construction, you're reading company updates, tracking portfolio developments, and maintaining community connections. The time decreases but doesn't disappear.

Decade-long commitment is the reality. Angel investing outcomes take 7-10+ years to materialize. The investors who succeed maintain engagement through this entire period, sustaining interest and activity through years when nothing dramatic happens. This timeline commitment must be genuine, not aspirational.

The Temperament Requirement: Patience and Resilience

Beyond qualifications and resources, angel investing demands specific temperament that not everyone possesses. Honest self-assessment about fit matters before starting.

Comfort with uncertainty is essential. You'll spend years not knowing if your decisions were correct. Companies exist in ambiguous states where success remains unclear. If uncertainty creates significant stress for you, angel investing may be poor fit.

Acceptance of failure must be genuine. Most investments will fail completely. Watching companies you backed shut down is emotionally difficult. If investment losses create lasting distress beyond mild disappointment, reconsider whether angel investing suits your temperament.

Patience for long timelines must be authentic. Seven to ten years is genuinely long. If you need to see results within a few years to stay motivated, the angel investing timeline will frustrate you.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere."

Recognizing great founders requires patience and openness that extends across the entire investing timeline.

The Community Requirement: Infrastructure and Support

Solo angel investing rarely succeeds. The practical requirement most beginners underestimate is community membership that provides essential infrastructure.

Deal flow access requires community. Quality opportunities don't arrive through casual networking. Communities like Angel Squad provide curated deal flow from institutional pipelines like Hustle Fund's review of 1,000+ monthly applications. Without community, you're limited to random network deals of inconsistent quality.

Education requires structured support. Learning angel investing through expensive mistakes is slow and costly. Community programming from active practitioners accelerates development while reducing error costs.

Accountability requires external structure. Maintaining engagement over years is difficult alone. Community rhythm creates the structure that sustains involvement through the boring middle years.

Angel Squad provides what becoming an angel investor requires: accredited investor verification, $1,000 minimums enabling proper portfolio construction, curated deal flow from institutional pipeline, weekly education from active GPs, and community of 2,000+ members across 50+ countries.

What does it really take to become an angel investor? Accreditation, genuine surplus capital, sustained time commitment, appropriate temperament, and community infrastructure. Meet these requirements honestly, and the path is clear.